Home > Financial Aid > Changes to Student and Parent Federal Loans

Changes to Student and Parent Federal Loans

The One Big Beautiful Bill Act Updates, signed into law on July 4, 2025, makes significant changes to federal student loans that take effect on July 1, 2026.

This webpage was designed to help you understand what is changing, when the changes take effect, and what they mean for federal loan borrowers. The information provided is not intended to provide legal advice nor is it intended to address any specific scenario. For assistance with a particular situation, the services of a tax or legal professional should be sought.

» Important Definitions

• Loan Limits
• Loan Limits Exception
• Repayment Assistance Plan
• Tiered Standard Plan

Schedule of Reduction (SOR) for Undergraduate Student Loans

Recent federal regulations introduce a revised Schedule of Reduction (SOR) that affects undergraduate federal student loan eligibility when enrollment is less than full time or changes during the academic year.

Full-time Enrollment – Semester and Academic Year

• A student enrolled in 12 credits in a single semester is considered full-time for that semester.
• A student enrolled in 24 credits over the academic year is considered full time for the year.

What Has Changed

Under the new regulations, undergraduate loan amounts will be adjusted based on enrollment status, rather than remaining fixed for the year. This means:

• Students enrolled less than full-time are subject to reduced annual loan limits.
• Loan eligibility may be recalculated if enrollment changes during the year, such as when a student drops a class.
• Reductions are applied according to a federal schedule, which scales loan amounts based on the student’s enrollment level at the time of review.

How Enrollment Changes Affect Loans

If a student’s enrollment status decreases after loans have been offered or disbursed:

• The loan amount may be reduced to align with the student’s new enrollment level.
• This may result in a required adjustment in the current or future semester depending on when the change in enrollment occurred.
• These changes can occur even if the student began the term enrolled full-time.

What Students Should Know

• Students considering a change in enrollment are strongly encouraged to contact the Financial Aid Office before changing enrollment, as even small credit reductions may impact federal loan eligibility.
• Enrollment changes may affect not only loan eligibility, but also overall financial aid and repayment obligations.

Federal Parent PLUS Loan Changes

What Current Parent Borrowers Need to Know

New federal borrower limits cap the Parent PLUS loan at $20,000 per year and $65,000 in total, but the law allows for a time-limited exception to the new loan limits for currently enrolled students. For Parent PLUS Loan borrowers to not be subject to the new loan limits:

• Students must remain continuously enrolled in the same program of study at the same institution as they were enrolled as of June 30, 2026.

AND

• The parent borrower must have had a Parent PLUS Loan disbursed for that same program before July 1, 2026.

OR

• The student must have had a Direct Loan disbursed for that same program before July 1, 2026.

If the above requirements are met, the new Parent PLUS loan limits do not apply while the student is completing their program and the parents may continue borrowing up to the full cost of attendance (minus other aid), until the completion of the student’s current program (within the program length) or cease enrollment.

What happens when the student no longer qualifies for the limited exception?

If the student does not complete their current program within the program length, withdraws or otherwise ceases enrollment from their current school or completes their program of study, Parent PLUS Loan borrowers become subject to the new $20,000 annual and $65,000 aggregate loan limits.

What New Parent Borrowers Need to Know

Changes to the law affect how much parents can borrow from the Parent PLUS Loan program for their student’s college education.  The new loan limits for the Parent PLUS Laon program are as follows:

• $20,000 per dependent student, per year (annual limit).
• $65,000 per dependent student, in total (aggregate limit).

Planning annual PLUS borrowing to ensure continued access

The new aggregate limit of $65,000 means that borrowing the annual maximum for a four-year undergraduate program will cause parents to reach the aggregate limit before the student completes their degree, without further access to the Parent PLUS Loan.

On the Parent PLUS Loan application, parents who select the “maximum amount” option if they wish to borrow the full $20,000 for the year.

To ensure adequate Parent PLUS Loan eligibility for the duration of the student’s undergraduate program, parents should request a lesser amount on the application. For example, request $16,250 per year for total ($65,000 aggregate) eligibility to be split equally for a four-year program.

Changes to Federal Loan Repayments

Federal Loan Repayment Prior to July 1, 2026

Student borrowers are not required to begin repayment on federal student loans until 6 months after they have graduated or dropped below half-time. At that time, the loan servicer(s) would reach out to the student borrower directly to set up a repayment plan. The student is responsible for repayment, even if they do not hear from their loan servicer. Student borrowers can find their loan history, loan servicer, and loan servicer contact information by logging into their FSA account at studentaid.gov.

Current borrowers with no new loans made on or after July 1, 2026, are eligible to enroll in the current Standard, Graduated, Extended, or current Income-Based Repayment (IBR) plans, and may also opt in to the new Repayment Assistance Plan (RAP). Current borrowers may also switch between, enter, or remain on existing Income-Driven Repayment (IDR) plans until July 1, 2028.

Current borrowers enrolled in any of the following:

• Income-Contingent Repayment (ICR) Plan
• Pay As You Earn (PAYE) Plan
• Saving on a Valuable Education (SAVE) plan

By July 1, 2028, if no selection is made, the borrower will be transitioned into RAP automatically. If not eligible for RAP, the borrower will be placed in IBR.

Federal Loan Repayment Beginning July 1, 2026

Student Direct Loan Repayment:

Student borrowers that have loans prior to and after July 1, 2026, will only have access to the new Standard Repayment Plan and Repayment Assistance Plan (RAP). These are the only two repayment options available for borrowers with both old and new loans.

Student borrowers with new federal student loans originating on or after July 1, 2026, will have access to the new Standard Repayment Plan and the RAP. These are the only two repayment options available for new loans issued on or after July 1, 2026.

Parent PLUS Loan Repayment:

For parents who borrow Parent PLUS loans on or after July 1, 2026, and parents who borrowed Parent PLUS before July 1, 2026, and are also subsequently borrowing from the program on or after July 1, 2026, repayment for all loans must be repaid under the New Standard Repayment Plan. They are not eligible for RAP.

Details of the repayment plans can be found on studentaid.gov. Student borrowers should contact their loan servicer for additional information.

If your loans are all first disbursed before July 1, 2026, you will have access to the following repayment plans:

• Standard Repayment Plan
• Graduated Repayment Plan
• Extended Repayment Plan
• Income-Based Repayment (IBR) Plan (requires additional steps)
• Income-Contingent Repayment (ICR) Plan (requires additional steps)
• Pay As You Earn (PAYE) Plan

Parents Who Have Previously Borrowed a Parent PLUS Loan and Are Enrolled in a Public Service Loan Forgiveness (PSLF) Program:

The new tiered standard repayment plan does not count as a qualifying repayment plan for PSLF purposes. As a result, borrowing a new Parent PLUS Loan on or after July 1, 2026, prevents borrowers from receiving PSLF, even if they have already made qualifying payments, as all Parent PLUS loans must be repaid under the new tiered standard repayment plan.

Parents who are planning to borrow a Parent PLUS Loan on or after July 1, 2026, but who want to preserve their eligibility for PSLF, may want to carefully consider other ways to help finance their dependent student’s education.

Parents who want access to an income-driven repayment plan and/or loan forgiveness for their Parent PLUS Loans must:

• Have consolidated their Parent PLUS Loans into a Direct Consolidation Loan prior to July 1, 2026, and are enrolled in the income-contingent repayment (ICR) plan prior to July 1, 2028, AND
• Not have borrowed a new Parent PLUS Loan on or after July 1, 2026.

Common Questions for Parents

I will have two children in college next year. One will be entering their third year of undergraduate student, and the other will be beginning their undergraduate program in the fall. I have borrowed a parent PLUS loan previously for my third – year student, will my borrowing maximums be the same for both of my children?

No, for your currently enrolled student you can continue to borrow under the legacy provision, that is, up to the full cost of attendance (minus other aid). For your future undergraduate student, you will be held to the new annual maximum of $20,000 per year and the new lifetime maximum of $65,000.

My child will be in their undergraduate program in the fall 2026 semester. I know I will not fall under the Parent PLUS loan legacy provision. If I need to borrow more than the $20,000 annual maximum permitted for Parent PLUS loan funding, what options do I have?

You can consider Alternative Student Loans. These are private loans (non-federal) offered through banks and other financial institutions to supplement financial aid offers. Terms vary by lender and typically require a credit check. Be sure to compare interest rates, repayment terms, and borrower protections. Find more information about alternative loans.

Federal Loan Repayment

Will there be any changes to deferment or forbearance eligibility in the future?

Starting July 1, 2027, economic hardship and unemployment deferments will no longer be available. There will still be a forbearance option, but it will be limited to 9-month increments during any 24-month (2 year) period. Federal loan services will still have the option to place borrowers in temporary forbearances throughout the life of the loans.

What, if any, changes were made to the Public Service Loan Forgiveness (PSLF) program?